Volvo searching for a partner for new small cars

Tuesday 24 January 2012, 11:19 AM by

Volvo Cars, the Swedish automaker, is seeking a partner with whom it can develop its upcoming small cars. Stefan Jacoby, Chief Executive of Volvo Cars, said it looking for a company to share platforms as well as components for its upcoming range of small cars. Currently, it develops its C30 compact on the platform developed by Ford, its former owner.

Jacoby stated that the company is open for partners. He further added, “We are open for collaboration in a win-win situation for sharing platforms, for sharing engines and for a general higher scale of economics.” He also said that a final decision has still not been taken, although company has few names in its list.

Volvo Cars recorded the sales of around 4, 50,000 cars in 2011, reflecting a year-over-year rise of 20 per cent. However, this rise is not enough to compete in the competitive and scale-driven international auto industry.

In 2010, Ford sold Volvo to China's Zhejiang Geely Holding Group for about $ 1.5 billion. At the time of the deal, Ford agreed to provide the platform to Volvo Cars for some time, though the duration of the same was not revealed.

Car manufacturers are looking for partners in order to share the costs for the small car segment and earn a profit. Last year, Volvo and Siemens had formed an alliance for the electric car technology. Forming an alliance has become an industry trend in recent times, with Daimler joining hands with Renault and Nissan to produce vehicles, including hatchbacks. The CEO of Fiat, Sergio Marchionne, believes forging alliances with rival manufacturer becomes essential for surviving in an intensely-competitive mass market.

In March 2012, company will launch its latest compact V40, a replacement of S40 and V50, in Geneva. However, company has not yet revealed about the manufacturing location of the car.

Jacoby claims that in the next 10 years, the company will double its sales to 800,000. In order to meet the goal, Volvo is all set to build two plants in China, along with an engine plant. In order to simplify operations and reduce costs, the company has also reduced its engine choices. Initially, the engine portfolio consists of 10 types, but now there are only two, one each for petrol and diesel.

Additionally, the company is planning to build its larger vehicles using unified scalable product architecture, which was earlier seen in Volkswagen's “modular toolbox” approach. In this endeavour, Volkswagen had developed cars of various sizes from a single unit, a feat that will be replicated by the Swedish auto maker.